Top US stocks to watch before the bell: Palantir, Roblox and L Brands

Palantir and Roblox both grow faster than expected, L Brands prepares to spin-off Victoria’s Secret, Novavax faces more delays to its vaccine, Alphabet enters the remittance market, Virgin Galactic spooks investors, and a Foxconn factory making iPhones is hit by the pandemic.

USA (1)

Palantir

Big data analytics company Palantir said revenue grew faster than expected during the first quarter, driven by increased demand from the US government and businesses.

Revenue rose 49% to $341 million, faster than the 45% growth guided by Palantir ahead of the results and the $332.2 million expected by Wall Street. It said revenue from the US government was up 83% year-on-year while demand from US businesses grew 72%. Its operating margin of 23% came in line with expectations. Its pretax loss widened to $120.4 million from $54.3 million the year before due to a significant rise in costs.

Palantir said it expects to deliver $360 million of revenue in the second quarter, representing 43% growth from the previous year, and for its margin to stay flat at 23%. It said it is now hoping to deliver annual revenue growth of at least 30% between 2021 and 2025 and for adjusted free cashflow to exceed $150 million this year.

L Brands

L Brands has revealed it is preparing to spin-off lingerie brand Victoria’s Secret rather than sell it to another company as it prepares to report record first-quarter results.

The company said it was considering separating the business last year, including testing appetite among private equity groups for a potential sale. However, L Brands has now decided to split into two publicly-listed businesses – Victoria’s Secret and Bath & Body Works. That is expected to be completed in August.

L Brands said it expects to report first-quarter adjusted earnings per share of $1.25, well ahead of its previous target range of $0.85 to $1.00, driven by the strong sales and margins from both businesses. Results will be released after the market closes on May 19.

Roblox

Gaming firm Roblox smashed market expectations as it released its first trading update since its blockbuster listing earlier this year.

The company said revenue jumped 140% year-on-year in the quarter to $387.0 million, while bookings jumped 161% to $652.3 million as it benefited from kids spending more time at home. Analysts had expected bookings, which represents the value of the virtual currency users use to buy things on its platform, of just $504.6 million. The net loss widened to $1.9 million from $498,000 or to 46 cents from 44 cents.

Roblox said it had 43.3 million daily active users, up from 42.3 million in March, while the time spent on the platform remained steady.

Apple and Foxconn

Production at one of Foxconn’s plants in India producing Apple’s iPhone 12s has more than halved due to a shortage of workers as the coronavirus pandemic continues to ravage the country, according to a report from Reuters.

Unnamed sources have said the facility in the southern state of Tamil Nadu makes the phones specifically for the Indian market, but output is thought to have dropped more than 50% due to a rise in infections amongst workers.

Alphabet and Western Union

Alphabet has launched a new international money transfer service for Google Pay with the help of remittance companies Wise and Western Union.

Americans will initially be able to use the app to send money over to India and Singapore. By the end of the year, that will expand to all of the 80 countries Wise operates in and the 200 that Western Union is in. It represents a major move for Google as it enters the remittance market as competition in the digital payments market intensifies.

Tesla

Electric carmaker Tesla is reported to have halted plans to buy additional land to expand its plant in Shanghai because of uncertainty over relations between the US and China, according to Reuters.

The factory is designed to produce 500,000 cars a year and is currently churning out around 450,000 Model 3 and Model Y cars. It is thought the expansion would raise capacity by another 200,000 to 300,000 cars a year.

Tesla responded to Reuters by stating its Shanghai development was ‘developing as planned’, but sources say it decided against bidding for a plot of land adjacent to the plant because the viability of exporting Chinese made cars to the US is in question because of trade tariffs.

Novavax

Novavax has said it will take longer than expected to ramp-up production of its coronavirus vaccine and that it will wait to apply for approval in the US, UK and Europe.

The company has pushed back production forecasts on several occasions after struggling to get its hands on the raw materials and equipment it needs. It said regulatory submissions for its candidate will now be filed in the third quarter of 2021 rather than the second, with full production pushed back to the fourth from the third.

Previously it had said it would be producing up to 150 million doses by the end of the third quarter and submitting filings in the US before the end of this month. CEO Stanley Erck said major manufacturing hurdles had now been cleared and that production was steadily increasing.

Walmart

Flipkart, the Indian ecommerce firm owned by Walmart, is in early discussions with investors about raising $1 billion to $2 billion to help fuel its expansion, according to a report from the Economic Times.

Flipkart has been touted to launch an IPO for some time and the report suggested the fundraise was ‘not being positioned as pre-IPO but for expansion’. The company is rumoured to be targeting a valuation of up to $50 billion in any listing. Walmart paid $16 billion for a 77% stake in Flipkart back in 2018.

The fundraise comes as Flipkart faces increased competition from the likes of Amazon and local player JioMart.

Simon Property Group

Simon Property Group performed better than expected when it released quarterly results on Monday as the US mall operator started to welcome more visitors as lockdown restrictions were eased.

Property lease income fell 9.3% in the quarter to $1.15 billion, but that was slightly better than the $1.13 billion expected by analysts, whilst net profit of $1.36 per share fell from $1.43 but was also better the $0.96 expected.

The company raised its full year guidance and said it now expects funds from operations to be between $9.70 to $9.80 per share compared to its previous range of $9.50 to $9.75. However, it said it now expects full year profit to be between $4.47 and $4.57 rather than $4.60 to $4.85 as previously expected.

Virgin Galactic

Virgin Galactic said it was evaluating the timing of its next test flight, spooking investors as it released first-quarter results.

The president of space missions and safety Michael Moses said the firm had ‘tagged a potential wear and tear issue as requiring further evaluation and analysis to see if any additional action is necessary’ following the latest inspection of its spacecraft.

The revelation came as Virgin Galactic revealed its first-quarter net loss amounted to $130 million compared to $377 million the year before. It ended the period with $617 million in cash.

Ginkgo Bioworks

Biotech firm Ginkgo Bioworks intends to go public by merging with SPAC Soaring Eagle Acquisition Corp in a deal that will value the business at $15 billion.

Soaring Eagle is led by former Hollywood executives Harry Sloan and Jeff Sagansky and the deal is expected to raise around $2.5 billion for the combined entity.

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